TSH up on firmer CPO prices, higher earnings ahead

KUALA LUMPUR (March 13): Shares of TSH RESOURCES BHD [] rose on Tuesday, riding on the upward trend in the crude palm oil futures prices despite the weakening broader market.

At 3.57pm, TSH was up 13 sen to RM2.32. There were 1.44 million shares done.

The FBM KLCI was just 0.04 of a point higher at 1,564.79. Turnover was 899.56 million shares valued at RM1.032 billion. Losers beat gainers 467 to 231 while 339 counters were unchanged.

Meanwhile, CPO futures for May delivery rose RM44 to RM3,360 per tonne.

Analysts were maintain a buy on TSH with a higher fair value of RM2.60 a shares compared with RM2.10 a share previously based on a FY12F price-to-earnings of 15 times. TSH’s historical seven-year PE band ranged from a low of 4.0 times to a high of 28 times.

“TSH’s FY11 results were in line with our expectations and consensus estimates. Our FY12F earnings estimates for TSH are relatively unchanged.

“Going forward, we have forecast that TSH’s net profit would climb 20% in FY12F, underpinned by a 26% increase in fresh fruit bunches production,” said Amresearch.



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Mudajaya up amid broader cautious market

KUALA LUMPUR (March 13): Shares of MUDAJAYA GROUP BHD [] were traded higher in the afternoon session on Tuesday despite the market turning cautious as the recent Tanjung Bin contract and strong earnings supported its share price.

At 3.36pm, Mudajaya was up 10 sen to RM3.19. There were 2.31 million shares done at prices ranging from RM3.07 to RM3.20.

The FBM KLCI was just up 0.93 of a point to 1,565.68. Turnover was 819.13 million shares valued at RM910.89 million. There were 228 gainers, 438 losers and 352 stocks unchanged.

OSK Research had in a recent report said the CONSTRUCTION [] company’s FY11 FY11 net profit of RM231 million came in within its and consensus estimates, aided by a favourable tax rate of 5.8%.

At the pretax level, earnings lagged both estimates by 21.1% and 12.3% respectively, owing to lower construction margins recognised and start-up expenses for its associate.

Mudajaya had also secured the RM1 billion civil works contract of the Tanjung Bin plant extension.

“Maintain BUY with our FV marginally lowered to RM3.88,” said OSK Research.



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UOB Kay Hian Research lowers consumer sector to market weight

KUALA LUMPUR (March 13): UOB kay Hian Malaysia Research is downgrading the consumer sector to Market Weight from Overweight as valuations of consumer stocks under its coverage appear fully valued.

It said on Tuesday these stocks had rallied 8%-20% since December 2011, with the sector trading at about one standard deviation above the historical average.

“We also do not anticipate any exciting corporate developments in the near term. (Recall in 2011, KFC Holdings (KFC) was proposed to be privatised, and Guinness Anchor (GAB) paid out a special dividend),” it said.

UOB Kay Hian Research said the present market climate remained supportive, pointing out that valuations were “not too hot” and earnings growth was moderating but not turning cold.

“The sector remains defensive as the anticipated strong consumption growth in 2012 plus good pricing power (which offsets some increases in raw material cost) ensure decent dividend yield of 2%-5%,” it said.

The research house said the consumer sector continues to be a beneficiary of fiscal stimulus, announced hefty 7%-13% pay hikes for civil servants for 2012, general election and special events (UEFA Euro Cup 2012 which will boost brewery consumption).

On its move to reduce the sector to Market Weight, it said this was to reflect fair valuations and moderate earnings growth prospects.

"Our stand also reflects our Sell call on KFCH as its price upside is limited by the takeover offer price (RM4) by Massive Equity Sdn Bhd while the completion of the privatisation exercise appears being delayed with the master franchisor, Yums! reportedly being reluctant to approve the deal.

“Among the segments, we still prefer brewery which should benefit from the imminent modest 3%-4% price hikes, low capex requirements and healthy volume growth (estimated 5% in 2012),” it said.

UOB Kay Hian Research said its preferred pick was Guinness Anchor (Hold, target: RM12.80), which continued to appeal for its steady market share gain, decent net effective yield of 4.7%, and likely distribution of a second tranche of special dividend (estimated 60 sen a share) which would most probably take place in FY13.

It raised its target price to RM12.80 from RM12.50 to account for the higher beer prices.



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Golden Knights Intl emerges as Gefung substantial shareholder

KUALA LUMPUR (March 13): Bahamas-registered Golden Knights International Ltd has emerged as a substantial shareholder in GEFUNG HOLDINGS BHD [] with a 5.11% stake or 13.50 million shares.

A filing with Bursa Malaysia showed that it accepted its entitlement of 7.5 million shares under a rights issue on Jan 20, 2012.

Gefung processes marble and granite products.



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KLCI stays in the black at mid-day

KUALA LUMPUR (March 13): The FBM KLCI stayed in positive territory at the mid-day break on Tuesday, in line with the modest gains at key regional markets.

The FBM KLCI was up 2.24 points to 1,566.99 at the mid-day break. However, the broader market turned weaker with losers overtaking gainers by 355 to 241, while 246 counters traded unchanged. Volume was 484.42 million shares valued at RM528.11 million.

The ringgit strengthened 0.28% to 3.0233 versus the US dollar; crude palm oil futures for the third month delivery rose RM28 to RM3,348 per tonne, US light crude oil added 59 cents per barrel to US$106.93, while gold gained US$2.18 an ounce to US$1,703.50.

Meanwhile, Asian stocks rose to their highest in a week, while the dollar hovered below an 11-month high against the yen on Tuesday, supported by recent signs of improvement in the U.S. economy, ahead of a policy decision by the Federal Reserve, according to Reuters.

Bank of Japan's policy meeting, which began on Monday, will also remain in focus. The bank is expected to hold rates as the economic outlook and risks have not changed much since its last meeting nearly a month ago, it said.

A the regional markets, Japan’s Nikkei 225 gained 0.40% to 9,889.86, Hong Kong’s Hang Seng Index added 0.23% to 21,134.10 and the Singapore Straits Times Indx0.11% to 2,966.55.

However, the Shanghai Composite Index shed 0.19% to 2,434.86, Taiwan’s Taiex fell 1.10% to 7,927.55 and South Korea’s Kospi was down 0.78% To 2,002.50.

BIMB Securities Research in a note on Tuesday said investors would remain sidelined attributed to the lack of fresh catalysts especially after the 14 point decline on the KLCI on Monday.

Now that a Greece tragedy has been averted, attention will now be fixed on the fundamentals and economic progress of both the US and Eurozone, it said.

Following the rather sharp 14 point decline to just below the 1,565 support level on Monday, BIMB Research said it had expected some reversal on Tuesday and that the KLCI might test the immediate 1,570.

On Bursa Malayasia, BAT was the top gainer and rose 80 sen to RM52.80, TAHP 20 sen to RM5, Tradewinds PLANTATION []s 16 sen to RM4.71, Manulife, Sin Heng Chan and Petronas Chemicals rose 13 sen each to RM3.52, RM93.5 sen and RM6.69 respectively, GAB eight sen to RM13.38 and TSH seven to RM2.26.

Naim Indah Corp was the most active with 68.9 million shares done. The stock fell half a sen to 72 sen.

Other actives included Winsun, YTL, Takaso, Tiger Synergy, XDL, Sanichi, Sumatec and HWGB.

Decliners included Nestle, Theta warrants, Allianz warrants, United Plantations, MISC, Shell, Orient, BLD Plantations, Tradewinds and Southern Steel.



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CIMB Economics Research: Developed economies on recovery path

KUALA LUMPUR (March 13): Developed economies are on the recovery path, lifting the optimistic sentiments of a global recovery, as the OECD composite leading index (CLI) posted its third consecutive months of gains in January.

CIMB Economics Research said on Tuesday that however, the indicators for China and Asean reaffirmed its expectations of slower but respectable growth rates.

In its economic outlook, it said the OECD CLI growth was gaining momentum after rising 0.4 of a point in January 2012 (up 0.3 in December, up 0.2 in November).

As for the US and Japan CLIs, there were four straight months of positive growth, presaging more heartening economic conditions ahead.

It pointed out that even the debt-plagued 17-nation Eurozone registered a 0.2 point increase, the second month of expansion that snapped 10 months of negative month-on-month changes.

“The CLIs for the emerging economies show a less decisive course, though we continue to predict a slower, albeit respectable, growth rate,” it said.

CIMB Economics Research said the factors were that China’s CLI continues to point to below-trend growth as its exports and industrial production loses steam.

As for India, its CLI showed stronger signs of a positive change in growth momentum.

The research house said the Asian Business Cycle Indicators (ABCIs) show weak growth momentum in most Asean economies, albeit with some signs of improvement.

“Despite these and other encouraging global data as well as positive policy developments helping to calm waters in Europe and US, we remain cautious as tail risks remain,” it said.

Among the concerns were: 1) tensions in the Middle East which could trigger a global oil price shock; 2) unresolved uncertainty with regards to the Eurozone’s sovereign debt saga that will sap confidence; 3) high joblessness and concomitant impact on consumer spending in the advanced economies; 4) fiscal cutbacks in developed economies that dampen, if not eliminate, growth; and 5) potentially destabilising capital flows in emerging economies.



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KLCI drifts higher at mid-morning

KUALA LUMPUR (March 13): The FBM KLCI drifted slightly higher, lifted by select blue chips at mid-morning on Tuesday in line with the limited gains at key regional markets.

Meanwhile, at the regional markets most market players were on the sidelines awaiting the outcome of a Federal Open Market Committee meeting later in the day, according to Reuters.

The FBM KLCI added 2.47 points to 1,567.22 at 10.05am. Gainers led losers by 198 to 187, while 276 counters traded unchanged. Volume was 252.62 million shares valued at RM166.43 million.

At the regional markets, Japan’s Nikkei 225 rose 1.14% to 10,002.90, Hong KONG’s Hang Seng Index added 0.77% To 21,297.40, the Shanghai Composite Index edged up 0.05% to 2,436.08, Taiwan’s Taiex gained 0.82% to 7,992.51, South Korea’s Kospi was up 1.15% to 2,025.52 and Singapore’s Straits Times Index added 0.52% to 2,977.65.

Maybank Investment Bank Bhd head of retail research and chief chartist Lee Cheng Hooi in a note to clients said the resistance areas of the KLCI at 1,564 and 1,583 would cap market gains, whilst the weaker support areas were at 1,540 and 1,559.

“Despite the US markets’ rebound last night, we could be in for a weaker day locally,” he said. The KLCI fell 14.25 points to close at 1,564.75 on Monday.

On Bursa Malaysia, BAT was the top gainer, up 40 sen to RM52.40, Ekovest added 15 sen to RM2.75, Sin Heng Chan gained 13.5 sen to 94 sen, LPI Capital 10 sen to RM13.66 and Tradewinds PLANTATION []s nine sen to RM4,64.

Petronas Chemicals and GAB up eight sen each to RM6.64 and RM13.38, Vintage 7.5 sen to 13 sen, Axiata six sen to RM5.10 while Hoover added five sen to 36 sen.

Naim Indah Corp was the most active with 52.94 million shares done. The stock fell half a sen to 72 sen.

Other actives included Winsun, Takason, Tiger Synergy, XDL, Sanichi and Sumatec.

Decliners included Theta warrants, Allianz warrants, UAC, MISC, Carlsberg, tradewinds, Johore Tin, BLD Plantations, AMMB and Hong Leong Bank.



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AsiaEP Resources major shareholder calls for EGM

KUALA LUMPUR (March 13) : asiaEP Resources Bhd’s major shareholder Tian Ee Intertrade Sdn Bhd has made a requisition for an EGM following the company’s decision to terminate its planned private placement, the firm said in statement to Bursa Malaysia on Tuesday.

asiaEP had planned to undertake a private placement of 90 million new shares to raise RM9 million. The money is intended to finance the CONSTRUCTION [] of bioethanol processing plants in conjunction with letter of award which was entered into between the company and Lestari Pasifik Bhd on Oct 5 last year.

But the deal was called off in February this year, resulting in the termination of the proposed private placement. Trading of asiaEP shares was suspended between 9am and 10 am on Tuesday.

The stock closed at 8.5 sen on Monday.



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